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A cart at Madras

Chapter 3 – Consolidation of the English East India Company


In India the last years of the seventeenth century had been for the English East India Company a period of not untroubled transition from a purely commercial system into a kind of elementary local self-’ government. The increasing weakness of the Moghul Empire doubled the risks and uncertainty of their trade; producing constant alarms from the fighting that went on near their settlements, liability to plunder and incessant exactions, exposure to interference from interlopers, and danger of encroachment or attack from European rivals. They had now deliberately adopted the plan of endeavouring to rid themselves of dependence on the native authorities; and their agents were enjoined to spare no pains for improving their revenue. “The increase of our revenue,” they wrote in 1690, “is the subject of our care as much as our trade; ‘tis that must maintain our force when twenty accidents may interrupt our trade; ‘tis that must make

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us a nation in India ... and upon this account it is that the wise Dutch, in all their general advices that we have seen, write ten paragraphs concerning their government, their civil and military policy, warfare, and the increase of their revenue, for one paragraph they write concerning trade.” Their purpose was now, to quote a letter to Fort St. George, dated December 12, 1687, to establish “such a Politie of civil and military power, and create and secure such a large revenue, as may be the foundation of a large, well grounded, sure English dominion in India for all time to come.”

These instructions show that, to use an Oriental metaphor, the scent of dominion was already in the nostrils of the English Company, that they were by this time on the track of higher game than the profits of trade, and that they were gradually concentrating their operations upon the Indian mainland. At Madras and Bombay, their fortifications were in fair condition, although their troops, besides a few Europeans, were chiefly a rabble of Armenians, Arabs, negroes, and half-breed Portuguese. In Bengal, the imperial viceroy, being himself hard pressed, had permitted their agent to fortify Calcutta, where Fort William was named after the reigning King of England.

In 1687, having resolved to bring all their settlements under a regulated administration, the Company had fitted out a large armament at home, had obtained King James’s authority for their governor to make peace and war in India, and had sent out Sir John Child with orders to levy against the Moghul government

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Matharan, a hill-station near Bombay in western India

a war of reprisals for damages and insults suffered from the native officials. That government, however, though it was in a bad plight, had still power and pride sufficient to turn fiercely upon such assailants. In Western India, the Company’s attempt to defy the imperial authority brought them to considerable discomfiture, for Aurangzib himself was encamped at no great distance with his main army.

At Bombay, where the force is reported to have consisted of fifteen European soldiers in addition to a raw native militia, the governor was actually besieged in his own town and castle, and the place was reduced to awkward straits by the fleet of the Abyssinian Siddhi.

The expedition against Bengal and the north-eastern coast totally failed; the factories were attacked and had to be temporarily abandoned. Orders were issued

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by the emperor to expel the English from Madras, where the president, having only a few English soldiers in garrison with some half-caste Portuguese, lost heart on hearing that a Moghul force was moving southward. Sir John Child, who impersonated the war policy of the Company, died in 1690; and the business ended rather ignominiously with the issue by Aurangzib of a lofty order reciting that, on receipt of a humble submissive petition by the English, his Majesty had mercifully pardoned their transgressions. At this message the Company’s directors at home professed high indignation, for no petition of that kind had been sent; but the moment was not opportune for prosecuting the quarrel.

During the next ten years, however, the difficulties and decadence of the Moghul empire were manifestly on the increase. One of Aurangzib’s sons invaded India from Persia with a foreign army; and the important provinces or kingdoms of South India – the Deccan, Mysore, and the Karnatic – were barely kept in obedience by large forces; for the old age of Aurangzib held all India in fear and expectation of imminent change. All this instability of affairs compelled the foreign settlements to rely more and more upon their own resources for self-defence against arbitrary officials, rebel leaders, marauding banditti, and, finally, against each other. For war had been raging in Europe from 1690 to 1697; the French had been doing enormous damage to the homeward bound ships of the East India Company, having on one occasion captured a whole fleet

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of merchantmen; nor did the Dutch, though our faithful allies in Europe, relax their inveterate jealousy of our progress in Asia.

That the vast importance of our Eastern trade was already realized to its full extent at the end of the seventeenth century, is abundantly shown by the writings of Sir Charles Davenant, the chief commercial authority of his day. He observes that under the Tudor dynasty England had enjoyed great internal prosperity for a hundred. years, and that the Dutch had soon found themselves too many for the narrow territory of their republic; whereby both nations were driven into foreign trade by an increasing population. On the other hand, he says, the French people had diminished during the long religious wars of the sixteenth century; so that the two Protestant nations could push on vigorously to their forward place in the commerce beyond seas.

In his essay on the East Indian Trade, Davenant enlarges further upon the great profits and political advantages that accrued to England from her position in the East Indies, upon the strength of Holland in that quarter, and upon the extreme impolicy of allowing the Dutch to acquire such predominance as would enable them to put down all rivalry. Of the East India trade he says that whatever country can be in the full possession of it will give law to all the commercial world. He declares that if we should lose our hold in India, we would let go half our foreign business; and he insists on the point that by losing this trade we would be entirely deprived of the dominion of the sea,

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“ for only foreign trade can maintain a great fleet.” He describes the “formidable power” of Holland in the East Indies; the immense capital that they had spent in raising and consolidating it; the forts and castles well provided and garrisoned; their large fleet; their good harbours; and the energy, wealth, and unity of the Dutch Company, which was an incorporation of the seven chambers of the seven provinces, almost coeval in origin with the state itself, counting among its numbers all the ablest and best heads in the country. He shows that if the English should abandon the traffic, the Dutch would undoubtedly enjoy the whole, while England must be content thereafter to trade under their protection and flag.

In such an event Davenant calculates that an entire monopoly of East Indian goods would bring Holland more treasure yearly than could be got from Peru and Mexico; that they might earn a revenue of six million sterling; and that this great increase of wealth would entirely turn the balance of naval preponderance against the English, which would certainly prove their ruin if (as was not impossible at the time) the Dutch provinces should fall under the ascendency of France. If, on the other hand, the English bestirred themselves and prevailed over Holland, “if our foreign business were enlarged to the utmost extent of which it is capable, we should thereby acquire such wealth and power as that England with its proper forces might be able to deal with any nation whatsoever;” she might even become, like Rome, the head of a vast dominion, the

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fountain of law, and the source of power, honours, and offices throughout an immense territory.

Let us take, again, another and much more celebrated contemporary authority, Leibnitz, who in 1672 presented to Louis XIV his Consilium Aegyptiacum, which was a long state paper urgently advising the king to seize and annex Egypt. His main argument was that the possession of Egypt would secure to France the command of the invaluable Eastern trade, whereby she could easily ruin Holland by cutting off the sources of her wealth and naval power, and would be enabled to build up a maritime empire for herself. As Louis XIV was at that time preparing to attack the Dutch, Leibnitz pointed out that to break down their preponderance in the East Indies would be a far surer way toward subduing them than an invasion of Holland, and he proceeded to throw out some very remarkable suggestions in regard to the facility of establishing a great Asiatic dominion. No one can doubt, he says, that if the Portuguese could have employed larger forces in their earlier expeditions, they would have brought all India under their sway, for the whole of Asia is more easily conquerable than Germany; and the French king needs only the strength and riches that can be drawn from Asiatic commerce to become the supreme arbiter of European affairs.

Such views and arguments as these, emanating from men of the highest reputation and experience in commerce and politics, serve to explain what kind of prize it was over which the maritime nations of the world

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had been so long contending, and for which the English were now entering the list as competitors. This prize, they insist, is of inestimable value, and, what is more, can be won by the European power that strikes boldly and skilfully for Asiatic dominion. The writings of Leibnitz and Davenant may be read as a useful corrective of the inveterate habit, from which even English historians are not always free, of regarding the development of our Indian empire out of a few scattered trading ports as a marvellous phenomenon, quite unforeseen awl almost inexplicable. It is worthwhile to point out the superficiality of this commonplace view, and to lay stress on the evidence available to prove that the success of the English in India could be naturally explained, could indeed have been predicted to a large degree.

The British dominion in the East grew out of much stronger and deeper roots than is usually supposed. To understand its true origin, we must remember that the English settlements on the Indian mainland were valuable not only as emporia for the very profitable trade in the exchange of goods between India and Europe, but also because they were the fixed points upon which the whole commerce of England with South Asia, from the Persian Gulf eastward to Sumatra, Java, and the Spice Islands as far as the China seas, may be said to have pivoted; they kept open and were indeed indispensable for the communications along the line of what was then the richest sea-borne traffic in the world. For the nation that could engross that traffic held the whole

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The great temple of Boro-Budur in Java

carrying trade between Asia and Western Europe, and supplied all the adjacent European countries. Upon the wealth and multiplied force acquired in extending, step by step, their influence over this wide range of operations, upon the gradual strengthening in English hands of the foundations that supported this commanding position, were built up the first stages of English ascendency in the East.

The constitution of these great commercial associations resembled in many respects that of the proprietary colonies which laid the foundation of such states as Maryland and Pennsylvania in North America. The proprietary bodies appointed the governor and council, and were in fact invested with a kind of autonomy under the general authority of the sovereign; they had

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many of the attributes, without much of the responsibility, of dependent states. It had become abundantly clear that this organization of a Chartered Company, with powers of internal control and self-defence, possessing in some degree the resources and administrative traditions, the unity of plan and purpose, and the larger interests and relative responsibilities of a local government, was necessary to the existence of British commerce in Asia, where England then had no diplomatic representatives and many dangerous rivals. The long contest throughout the seventeenth century between England and Holland in the East Indies was destined to terminate in a kind of partition of that vast commercial domain.

Not until the nineteenth century was a final political settlement accomplished; yet the first approaches toward this end were already perceptible in the tendency of English enterprise to converge, as we have said, upon India itself, while the Dutch were visibly drawing off and collecting their strength toward Java and Sumatra. Beyond the Straits of Malacca they were still predominant; the headquarters of their administration were at Batavia; and they had seized, in 1683, the valuable position of Bantam in Java, which gave them a virtual monopoly of the trade in pepper, the most valuable commodity from those regions. The English Company had before them the example of the Dutch, who had adopted from the Portuguese the policy of making their settlements self-protective by fortifications and strong garrisons, of acquiring territory, and

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of treating their acquisitions, not as grants held by traders on sufferance from the nearest Oriental potentate, but as possessions held under direct or delegated authority from the sovereign European power. They saw that they could only maintain their ground by imitating this example; and henceforward their establishments were more and more framed and directed upon this model.

But in London the enormous profits of the Company were exciting jealousy and stimulating energetic attempts to break in upon such a magnificent treasure-house. Sir Josiah Child, who then ruled their affairs autocratically, had enlisted the favour and support of the court by presents to King James II and to all who had influence at Whitehall. Unluckily, the India House had just set its sails upon the Tory tack when a Protestant wind brought over William III, and after the Revolution of 1688 a new Company was formed to compete for the next charter upon a remodelled system. In 1693, the old Company’s charter was declared void for non-payment of a five per cent. duty laid by the Crown on their capital stock; and it was renewed only upon condition of its being terminable at three years’ notice. Then in 1698 Montague, the Chancellor of the Exchequer, being hard pressed for money, passed an Act of Parliament granting a Royal Charter to the new Company, who undertook to lend two millions to the government at eight per cent. The money was subscribed with an eagerness that proved the country’s wealth, as well as its confidence in the strength and

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The old East India House (1796–1858)

expansive power of this great branch of the national trade.

The appearance in India of a second and rival Company created serious internal complications. Each association did its utmost to ruin the other; each hoisted the English flag and sent an embassy to contend for the Moghul emperor’s patronage at his court; while the local governors played off one against the other, favouring each Company alternately, and taking bribes impartially from both. This discreditable and damaging contest was at last closed by the union of the two Companies, which was effected through Godolphin’s intervention

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in 1702, just before the great war of the Spanish succession began, and immediately after the accession of Queen Anne. The effect of this measure was to concentrate all the enterprise, capital, and maritime experience of one powerful corporation upon the consolidation of the English position in South Asia.

The East India Company, by whom our Indian affairs were administered for the next one hundred fifty-five years, were now backed by the most opulent city and the largest seafaring population in the world, by the favour of the English government, to whom they made liberal advances, and by the increasing influence of the commercial classes upon the politics of the country. With these advantages, with a secure base and headquarters at home, with fortified settlements and armed shipping abroad, with a charter authorizing them to raise troops and to make war and peace in India, the Company were already capable of defending themselves, and even of pushing forward their outposts against any opposition that could be made by the viceroys of a distracted Oriental empire.

The history of Venice and Genoa had already shown what might be achieved by the power of armed commerce in the hands of small communities greatly superior in wealth and civilization to their neighbours. These towns had grown into independent States by successful monopoly of the Asiatic trade in the European waters; they were originally no stronger than a chartered English Company of the seventeenth century. The decadence of the Byzantine empire enabled the

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Italian cities to supplant the Greeks in the Levant, to acquire and fortify the islands and other points of vantage along the coasts, and thus to seize trade and territory in the Mediterranean very much as the Dutch and English established themselves in the Indian seas. Chios belonged entirely to a Genoese Company, whose rule for two hundred and twenty years over several islands of the Greek archipelago bears a curious likeness, in miniature, to the territorial domination of the English East India Company. The ruins of strongholds and other signs of extinct Italian dominion are to be, seen all along the shores of Greece and Asia Minor, like the relics of the Dutch and Portuguese settlements on the Indian Ocean or the Persian Gulf.

But neither Greeks nor Italians could resist. the torrent of Asiatic conquest that came pouring across Asia from the East. The Italian republics had not the population, capital, or territorial resources sufficient for holding their scattered possessions against the fleets and armies of the Ottoman empire; their territory on the Italian mainland was constantly threatened by powerful neighbours; and the diversion of the Asiatic trade was drying up the springs of their prosperity. Nevertheless, when we consider how much was accomplished by these small trading states so long as the field lay open to them, and even while they were confronted by the Turkish power in its full strength on the mainland, we may moderate our astonishment at the fact that the foundations of a great empire in India could be laid by an English trading Company, at a time when

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the Moghul Empire was rapidly waning and England was waxing to the plenitude of her maritime supremacy. It is true that the Levant and Greece lay adjacent to Venice and Genoa, while between India and England were six months of sea voyage. But this distance favoured the establishment of British dominion by keeping Indian affairs in the beginning outside the sphere of European politics; and latterly it became a distinct advantage to the nation that could give its commercial colonies a secure base at home, and could hold the sea against all rivals.

In this situation it might have been foreseen without much difficulty that as decay subsided into dilapidation all over the Moghul empire, the vigorous European settlements on the coasts of India would enlarge their borders and affirm their independence. When in 1672 Leibnitz advised Louis XIV not to attack Holland, but to seize Egypt as the stepping-stone to a great Asiatic dominion, he wrote, truly, that “the extreme feebleness of the Orientals is no longer a secret “; and India was now certainly the weakest, perhaps also still the wealthiest, part of South Asia. The quarrels and embarrassments of the local governors already prevented them from paying much attention to trading factories, except when money was to be extorted or assistance needed. It was clearly as probable that the native usurpers and adventurers who were rising into power would seek aid from the Companies as that they would afford them protection or subject them to control; they were more likely, in this manner, to throw

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The Nizam’s capital, Haidarabad

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open India to the foreigner than to bar the doors against him.

From such circumstances as these two consequences might fairly be inferred: first, that the power of the foreign Companies would steadily expand so long as they could rely on their communications with Europe; secondly, that commercial jealousies in Asia and national antipathies in Europe would before long bring the expanding Companies into collision with each other. Lastly, it might be ‘predicted that whenever this collision should occur, the Company that succeeded in overthrowing its European antagonist would have little to fear from native adversaries, and would have attained an incontestable ascendency in the adjoining provinces of India.

At the opening of the eighteenth century, therefore, the situation may thus be briefly indicated. The Dutch Company, still rich and prospering commercially, held Ceylon and some Indian stations, but the centre of their operations was slowly shifting further eastward, and as the century advanced their naval power declined rapidly, falling from one hundred and fifty-one vessels of war in 1671 to forty-two in 1740. The French Company had suffered heavily from the recent war in Europe, during which they had lost Pondicherry and had recovered it only in 1697; they were deep in debt, and were altogether in no condition for pushing forward enterprises in Asia. The English Company was flourishing and had obtained a firm foothold on the Indian mainland; but the Moghul Empire still held together

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under Aurangzib, who would have tolerated no serious territorial encroachment.

Up to this time, therefore, the policy of the French and English had remained strictly commercial in so far that all their plans and proceedings for settling upon the Indian coasts were designed in the interests of trade. We are now approaching the period when the growing strength of their position, the weakness of the Indian governments, the increasing keenness and impulse of competition, and, above all, the violent quarrels between France and England in Europe, combined to transform the commercial rivalry into an armed contest for political ascendency. For some twenty years South India became a battlefield of two distant European nations; the war of succession in Austria was made a pretext for taking sides in a dispute over the heritage of the Nizam of Haidarabad; and Indian affairs were entangled in the prolonged struggle between France and England for colonial and naval superiority. When England was eventually left mistress of the situation at the close of that struggle, she found thrown wide open before her the gates leading to immense territorial possessions, and to the consolidation of an Asiatic dominion which is perhaps the most eminent and valuable legacy bequeathed to us by our forefathers in the eighteenth century.

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